Buying a Property with Tenants In Situ – What you need to check
There are plenty of Pros and Cons to buying a property with a tenant in situ, but problems can occur when looking to progress through the eviction process if you don’t have all your ducks in a row.
Tenancy Agreements
Of course, to have a tenant, usually you will have a written tenancy agreement. The seller or the seller’s letting agent should be able to provide a copy of the tenancy agreement during the conveyancing process. The tenancy agreement will remain valid after the sale and it will include details you will need should you need to evict the tenant at a later date.
The issue that presents itself here is the date the tenant moved in. A tenant has different rights depending on the date the tenancy began, which is hard to determine without the written agreement (and a helpful tenant).
If a tenancy is created on or after 15 January 1989 and before 28 February 1997, it will be an assured tenancy; unless a notice was served confirming the tenancy would be an assured shorthold tenancy (section 20 notice).
An assured tenant has more security than an assured shorthold tenant, which means an assured tenant is more difficult to evict as there are only certain circumstances you can serve notice. A section 21 Notice ("no fault" eviction notice), for example, cannot be issued for an assured tenancy.
Therefore, it is very important that if a landlord is unable to obtain a copy of the tenancy agreement, they at least obtain confirmation of the date the tenant moved in to try and ascertain the type of tenancy and the rights the tenant has. If any section 20 Notice has been sent then a copy of this notice must be reviewed before completion takes place to ensure it is valid.
Deposit
The transfer of the deposit is something that a conveyancing solicitor and/or your lettings agent can handle during the conveyancing process. A copy of the original Prescribed Information is crucial together with a Deposit Protection Certificate to prove the deposit has been registered and transferred correctly. Not having these documents can cause problems should you wish to evict the tenant at a later date and may risk you being liable for a penalty payable to the tenant of of 1-3x the deposit plus the return of the deposit.
Prescribed Requirements – EPCS and Gas Safety
A Section 21 Notice will be invalid if the landlord is breach of the ‘prescribed requirements’. A potential buyer will there need to obtain copies of the following to ensure the landlord has complied with these requirements:
- Energy Performance Certificate
- All gas safety certificates from the start of the tenancy – we’ve had cases where our client's have purchased property with a tenant in situ but has not obtained a copy of the gas safety certificate from the start of the tenancy. The landlord has then faced difficulty trying to evict the tenant.
- Confirmation that the How to Rent Guide has been sent to the tenant and that the version served was the correct version at that time.
If any documents are missing this could impact the sale price of the property, particularly if the tenant has greater security or may prove difficult to evict.
If you need to evict a tenant where the property was purchased with the tenant In situ, or are looking to buy or sell a property with a tenant in situ, we strongly advise that you ask an experienced residential landlord and tenant specialist to review the tenancy paperwork in full.
If you have any questions on the above then please feel free to contact our residential landlord and tenant team who will be more than happy to assist.
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